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Saturday, May 19, 2012

Facebook starts trading stock public company.

Facebook Inc. shares got off to a rocky start in what has been the most highly anticipated initial public offering in history.

The stock jumped more than 10% in the first few minutes of trading. But then sellers swept into the market and that gain evaporated.

Facebook Founder Mark Zuck that’s erberg is hoping to make a lot of friends on Wall Street and billions of dollars as Facebook goes public.

facebook founder mark zuckerberg is hoping to make a lot of friends on wall street and billions of dollars as facebook goes public today. joining me is john fortt out in california. john, what is the reaction so far from the street to this launch of this ipo?

“It’s a total disaster because the stock is trading right at the IPO price,” said Francis Gaskins, editor of IPOdesktop.com in Marina del Rey. “They didn’t want that in a million years. A traditional IPO is up 10% or 15%.”

The stock most recently hovered at about $40, which is only $2 above what shares were priced at late Thursday night. Shares touched that $38 level multiple times during trading.

And investors also had to contend with a nearly three-hour delay for the stock to open. The Nasdaq kept the stock halted as it processed the crush of buy and sell orders that came through in the morning.

Well, andrea, I think they got motion sickness. It was up from where it was expected to come out at around $38 for a bit and went down to $38. People said this is horrible. Now it's up again above $41 a share which is a pretty good pop for a first day, i think about 7.7% right now.

Still, Facebook raised $16 billion in what will go down as the third-largest public offering in U.S. history and the biggest ever for a technology company.

After an anxiety-filled half-hour delay, its stock began trading on the Nasdaq Stock Market for the first time as investors were finally able to put a dollar value on the company that turned online social networking into a global cultural phenomenon.

By early afternoon, the stock was trading at around $41, an 8 percent increase for the day. That means Facebook is worth about $112 billion, more than Amazon.com, McDonalds and storied Silicon Valley icons Hewlett-Packard and Cisco.

"It's probably one of the first times there has been an IPO where everyone sort of has a stake in the outcome," said Gartner analyst Brian Blau. While most Facebook users won't see a penny from the offering, they are all intimately familiar with the company.

On Thursday, Facebook and the investment bankers settled on a price of $38 per share. The company and its early investors raised $16 billion in the offering, which valued Facebook at $104 billion. That makes Facebook the most valuable U.S. company to ever go public.

Indeed, the small jump in price could be seen as an indication that Facebook and the investment banks that arranged the initial public offering priced the stock in an appropriate range.

It's also a supply and demand issue. Facebook offered nearly 20 percent of its available stock in the IPO, so there was enough to meet demand. In comparison, Google offered just 7.2 percent of its stock when it went public in 2004.

There had been hopes that Facebook’s IPO would be a shot in the arm to the broader markets. But that too appears to have fallen by the wayside.

Major U.S. stock indexes were all higher in the hours leading up to the public offering.Once Facebook shares began to weaken, however, so did the market.